Blue Star well-positioned for eSports boom

Blue Star Capital (BLU), has announced 6-month results to 31 March 2022 alongside a positive update from key holding Guild Esports (GILD)

Blue Star ‘s portfolio consists of 11 disruptive technology companies, 8 of which are in the eSports and mobile gaming sector, 2 are in decentralised finance and payments, and one in the field of Non-Fungible Tokens.

Guild Esports, one of Blue Star’s eSports holdings, is growing steadily and attracting partnerships with major brands including Bitstamp, Samsung, and Sony PlayStation. With Bitstamp, Guild signed its largest ever £4.5m 3-year sponsorship deal, bringing total signed sponsorship revenue to £8.56m.

The company says it has sponsorships with around 30 tier-1 brands in advanced stages of negotiations, helped along by the success of its eSports teams which have won trophies in several major tournaments this year. The company also opened a new HQ in Shoreditch, providing state-of-the-art training facilities.

Guild also delivered its own 6-month update today, reporting a tripling of revenue to £1.1m, reflecting the growth in sponsorship income. That drove a 6-fold increase in  gross profit to £710,000, although pre-tax losses widened by 15% as the company made long-term investments in teams and content creation amongst other things. It said that ongoing improvements to its efficiency of operations were expected to lead to a 20% decrease in costs.

Net cash for Guild £6.1m on 31 March 2022, and its shares also commenced trading on the US OTCQB Venture Market.

Blue Star’s other companies are also growing nicely. Notably, its share in Dynasty Gaming and Media is now worth £4.8m, a significant premium to Blue Star’s total investment of £968k. Similarly, Blue Star’s interest in biometric technology platform Sthaler is now worth £387K, compared to a £50K investment, and its interest in NFT Investment is now worth £223K, compared to a £50K investment.

Despite its improved trading,  Guild’s share price declined significantly during the referenced period, from 5.1p/share to 1.95/p, resulting in a portfolio value decrease for Blue Star of £915K. This in turn resulted in a total net asset decrease for Blue Star of 7.8%, from £12.7m in FY21 to £11.7m at the end of the referenced period, a creditable outcome given wider weakness in growth and technology shares.